Is ‘Buhari Bounce’ Sustainable?

With 15.4 million votes, the 72-year old Muhammadu Buhari won the election against 13.3 million for the incumbent President Goodluck Jonathan. Despite the killing of over a dozen voters by Boko Haram insurgents, the election turned out to be one of the most orderly in Nigeria’s history, reportedly. And as President Jonathan conceded defeat, political risk decreased as well.

In the short-term, the ‘Buhari bounce’ is very positive. It supports an impression of a smooth transition of power in Abuja. By the same token, it allows investors at home and abroad to take another look at the economic potential of Nigeria.

It is the medium-term challenges that have the potential to make or break Nigeria’s growth promise.

Jonathan’s realities, Buhari’s promises

As the presidential candidate of the All Progressives Congress Party (APC), Buhari ran with a platform built around his image as a staunch anti-corruption fighter. Assisted by Gilbert Chagoury, a Lebanese-Nigerian businessman and APC leader Ahmed Tinubu, the campaign was run by former Obama campaign manager David Axelrod.

As a retired but resilient general who lost three previous elections, president-elect Buhari has promised to curtail corruption, boost average annual growth to 10 percent and create at least 1 million jobs per year. These are lofty promises, which can be fulfilled only partially, even in the best scenario.

Buhari did not win the elections on the back of his achievements. Rather, President Jonathan lost the elections because of his perceived failures. He failed to execute adequate economic reforms in time. He did not respond to Boko Haram early enough.

Nor was Jonathan able to restore governance credibility after the suspension of central bank’s former chief Sanusi Lamido, which alienated foreign investors.

Jonathan failed to distance himself from high-profile corruption debacles. And most importantly, his administration could not respond to the plunging oil prices, which overshadow Nigeria’s future.

When Buhari will take office in May, he can sustain the momentum of his winning campaign only if he can respond adequately to the challenges of the economy, security, governance, corruption and oil prices.

While the relatively smooth transition of power in Abuja does reflect the maturing of Nigerian democracy, it reduces but does not nullify political risk in Nigeria. The current honeymoon will be over soon. The opposition will become more vocal then.

The first gestures

Only a day after he became the first politician in Nigerian history to succeed an incumbent leader by ballot, president-elect Buhari pledged he would “spare no effort” to defeat Boko Haram.

Now he has to walk the talk. Nigerians may not expect him to resolve the challenge of terrorism, but they do expect him to deliver. He has to contain the threat. He has to make Nigerians feel safe at their home, their schools, their workplaces, their churches and their mosques.

Buhari also promised to tackle Nigeria’s corruption. It will not be easy. In the past decade or two, I have travelled across the world taking a closer look at many emerging economies that are struggling against corruption – as well as advanced economies where corruption has begun to thrive again.

Corruption can be surpassed, as Hong Kong and Singapore have shown – but not without systematic planning, fierce determination, and absolute accountability.

The twin themes of squashing Boko Haram and defeating corruption resonate well in Buhari’s constituencies and more broadly in Nigeria. The actual implementation of both objectives is a different story. It will require extensive institutional reforms in governance and a thorough struggle against the insurgents.

Neither struggle will be cheap, whether measured in expenditures or human lives.

A new transformation agenda

For years, the incumbent administration hoped to raise Nigeria’s global competitiveness to attract more domestic and foreign investment, particularly in the manufacturing sector. Yet, Nigerian competitiveness has eroded. Last year the country’s ranking in the competitiveness index slipped to the 127th.

The absence of adequate diversification is reinforced by the country’s weak institutions and corruption, as well as its deficient infrastructure, health and primary education. The good news is that there is much room to harness the latest technologies for productivity enhancements.

During his term, President Jonathan promoted his transformation agenda, while boosting regional integration and the country’s international clout. What Nigeria needs today is a new and revised transformation agenda that will promote inclusive growth and structural reforms, with particular emphasis on the role of family firms and small- and medium-size companies.

About a year ago, Nigerian economy surpassed South Africa’s as the largest on the continent after the release of the rebased GDP data. The latter showed that the country’s non-oil economy has more potential, grows faster and is more resilient than many expected.

It is this entrepreneurial, SME and family economy that has the potential to drive growth, productivity and employment in the future. Any BRIC dream is impossible as long as unemployment amounts to over 20%, “ghost workers” abound, and under-employment involves a huge share of the labor force.

Post-oil new normal

Like other oil-exporter economies, Nigeria is tackling a steep fall in the price of oil, which accounts for more than 70% of the nation’s fiscal revenue and over 95% of foreign exchange. As oil prices have plunged from more than $110 to around $55 in just a few months, Nigeria is coping with a merciless operating environment.

Since the nation was not able to diversify its industrial structure in good times; it must now do so in far more challenging times. Concurrently, it must improve productivity and competitiveness to generate inclusive growth, which is not possible without broad structural reforms.

Neither poverty nor income equality can truly be addressed without inclusive growth across the nation – both within the relatively more prosperous Christian South and the relatively poorer Muslim North, and between the two regions.

Historically, Nigeria’s greatest assets – its abundant natural resources – are its greatest potential liability. In the future, the country’s most critical challenge will be to diversify with and away from the oil sector.

It is vital to start changes with the struggle against terrorism. Only stability makes possible the creation of prosperity. But far more will be needed.

In the 1980s, Buhari struggled to rebuild the nation’s economic and political systems on the basis of very austere conditions. Ultimately, that task failed. But that does not have to be the case with the future.

Today, President-elect Buhari has the mandate given by the Nigerian people. He must use it wisely and with foresight. The nation is now at a critical crossroads. Overtime, it can fulfill its great growth promise. Or it can lose its way.

The burden of the nation’s future weighs heavily on Buhari’s shoulders.